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According to Wall Street.

Common sense says that skyrocketing workers compensation claims payments are responsible for more expensive premiums. But that long-standing logic was recently debunked in a surprising study. According to research from the University of California-Davis, premium rates are actually tied to the rise and fall of the Dow Jones Industrial Average and interest rates on U.S. Treasury bonds. Using information from the U.S. Bureau of Labor Statistics and data on workers comp costs and benefits from the National Academy of Social Insurance, the research team found that for the entire 35-year time frame of the study (1973 to 2007), premium rates rose whenever the Dow Jones or Treasury bond rates fell. And when the Dow or interest rates on Treasury bonds rose, premiums fell. The study illustrated that the inverse correlation was consistent and strong. "Increasing premiums had nothing to do with the number of injured workers, who often are incorrectly blamed for increasing premiums for employers," said J. Paul Leigh, professor of public health sciences at UC Davis and senior author of the study. Essentially, workers have been forking over more of their earnings when insurance companies are hit with losses from the stock and bond markets, making the consumer pay for investments gone bad.


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Author:Holbrook, Emily
Publication:Risk Management
Article Type:Brief article
Geographic Code:1USA
Date:Nov 1, 2011
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